Private security giant Serco accused of fraud over £285m prisoner escort contract

Services firm agrees to repay past profits from its £40m-a-year contract and forgo all future earnings

Serco, one of Britain's largest companies, is to be investigated for fraud after the Government and the services giant called in police to examine irregularities in records kept for its £285m prisoner escorting contract.

Justice Secretary Chris Grayling announced that the company has agreed to repay past profits from its £40m-a-year contract and forgo all future earnings after an investigation suggested records relating to the delivery of prisoners to courts had been falsified by members of its staff.

Mr Grayling said the review by Ministry of Justice (MoJ) officials had not found evidence that knowledge of the alleged malpractice reached the boardroom of the company, which last year had revenues of £4.8bn, but warned Serco that it faces being frozen out of all future public contracts.

Serco is one of two companies, along with G4S, which are also being investigated for allegedly over-charging the taxpayer in the “low tens of millions” to monitor non-existent electronic tags on prisoners, some of which had been assigned to dead detainees.

The Prisoner Escort and Custodial Services (PECS) contract is one of a gamut of public sector deals held in Britain by Serco, which earns hundreds of millions of pounds a year for providing services ranging from border controls to managing London's cycle hire scheme.

The MoJ said an audit of Serco's contract for transporting prisoners between court and jails in London and East Anglia had found “evidence of potentially fraudulent behaviour” by employees. The alleged fraud concerns the recording of prisoners having been delivered to courts when they had not - a key measure of performance for the contract. An audit is understood to have produced evidence that the figures may have been manipulated to enhance performance and earnings.

Mr Grayling said: “It has become very clear there has been a culture within parts of Serco that has been totally unacceptable, and actions which need to be investigated by the police.

”We have not seen evidence of systemic malpractice up to board level, but we have been clear with the company - unless it undertakes a rapid process of major change... then it will not win public contracts in the future.“

Chris Hyman, Chief Executive of Serco Group plc, said,: “The Justice Secretary is right to expect the highest standards of performance from Serco. I am deeply saddened and appalled at the misreporting of data by a small number of employees on the contract. This is a very serious matter for the customer and for us. We will not tolerate any wrongdoing and that is why we have referred this matter to the Police. It is also why I have immediately initiated a programme of change and corporate renewal.

“The overwhelming majority of our people work hard every day to deliver important public services and will share my deep concern about this matter.”

Start your day with The Independent, sign up for daily news emails
Sport
England's women celebrate after their 3rd place play-off win against Germany
Women's World CupFara Williams converts penalty to secure victory and bronze medals
Arts and Entertainment
Ricardo by Edward Sutcliffe, 2014
artPortraits of LA cricketers from notorious suburb go on display
News
newsHillary Clinton comments on viral Humans of New York photo of gay teenager
Arts and Entertainment
The gang rape scene in the Royal Opera’s production of Gioachino Rossini’s Guillaume Tell has caused huge controversy
music
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

Day In a Page

The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'